LeTourneau’s fate undecided as parent firm cites time to act

Published 12:01 pm Tuesday, March 1, 2011

A jump in profits as 2010 ended and improved market conditions make now the best time to sell or spin off LeTourneau Technologies, its Houston-based parent company says, leaving up in the air the future of the south Warren County plant that employs about 600 people.

Fourth-quarter profit for Rowan Companies Inc. fell 8 cents a share compared to a year before, but outpaced analysts’ forecasts by more than 10 cents. Same for its manufacturing and mining divisions, president and CEO Matt Ralls said when earnings were released Friday, and plans shelved with the onset of the recession to separate the jackup rig maker’s plants in Vicksburg and Longview, Texas, are back online.

“We have repeatedly stated that our strategy is to separate LeTourneau from Rowan when suitable market conditions exist,” Ralls said in a statement. “We believe favorable conditions now exist and expect to begin a process soon to either spin off or sell our manufacturing operations. Likewise, the land rig market in the U.S. has been strengthening, particularly for more capable land rigs like those that characterize the Rowan fleet, and we expect to begin a process to monetize this business in the near future as well.”

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The $150 million Joe Douglas, third in a line of 240-C class shallow water rigs built in Vicksburg, is the yard’s lone major job and will be ocean-ready by June.

About 600 jobs at the riverside Vicksburg plant off U.S. 61 South are safe through then unless employees are told otherwise, said plant manager Bo-D Massey.

The rig “is still on schedule to leave Vicksburg in June,” Massey said. “We’re waiting on word from corporate.”

Since mid-2008 when earlier moves to spin off LeTourneau were suspended, much of the local workforce’s energies have gone to service work on existing rigs and on contracts for rigs built overseas. The company has supplied rig kits for Brazil and Vietnam, and, last month, announced an $85 million order to build front-end wheel loaders for iron ore mining in Brazil.

The company said revenue rose 15 percent to $458.8 million for the quarter, $199.2 million from LeTourneau. Fourth-quarter profit totaled $57.3 million from $60.8 million a year before.